ECON202: Principles of Microeconomics - Monopoly

A comprehensive set of flashcards covering key vocabulary and terms related to monopoly and its implications in microeconomics.

Monopoly

An industry structure in which only one seller provides a good or service that has no close substitutes.

Monopolist

A seller that sets the price of a good and has market power.

Market Power

The ability of a firm to control the price and quantity of a good in the market.

Barriers to Entry

Circumstances that prevent potential competitors from entering the market.

Legal Market Power

A source of market power granted by government regulations, such as patents and copyrights.

Natural Market Power

Market power that arises from the control of key resources or economies of scale.

Economies of Scale

Cost advantages that a firm experiences as it increases production.

Price Discrimination

Charging different customers different prices for the same good or service based on their willingness to pay.

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved.

First-Degree Price Discrimination

Charging each consumer the maximum price they are willing to pay.

Second-Degree Price Discrimination

Charging different prices based on the characteristics of the purchase.

Third-Degree Price Discrimination

Charging different prices based on the characteristics of the customer or market segment.

Antitrust Policy

Government policies that aim to prevent anti-competitive pricing and monopolistic behavior.

Sherman Act (1890)

A U.S. law that prohibits agreements or actions that restrain trade and attempts at monopolization.

Efficient Price

A price that is equal to marginal cost, maximizing total surplus.

Fair-Returns Price

A pricing strategy where the price is equal to the average total cost, allowing for zero economic profit.

Social Surplus

The total benefit to society, calculated as the sum of consumer surplus and producer surplus.

Natural Monopoly

A market situation where a single firm can supply the entire market at a lower cost than multiple firms.